2020 (1) TMI 351

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....tter of penalty u/s.271(1)(c) of the Act for the assessment year 2011-12. 3. In ITA No.51/CTK/2016, although the assessee has raised several grounds of appeal but the sole issue involved is that the ld CIT(A) erred in confirming the addition of Rs. 8,00,000/- on account of unexplained cash credit u/s.68 of the Act. 4. Facts in brief as emanated from the orders of lower authorities are that during the course of assessment proceedings, the Assessing officer noticed that the assessee has shown unsecured loans of Rs. 43,04,368/-. The Assessing Officer required the assessee to furnish its bank accounts and the details of all the loan creditors with sources of cash deposits in their bank accounts. Before the AO, the assessee furnished its b....

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....has filed the copy of bank account of the loan creditor Shri Basanta Bihari and explained that the transaction was through cheque. He submitted that the creditor Shri Basanta Bihari is one of the Director of the assessee company having PAN No.AGNPB 9280 C and regularly filing the income tax returns showing the source of income. Ld counsel submitted that the loan transaction of Rs. 8,00,000/- is not a single transaction but Shri Bihari has given advances on several occasions to the assessee being a Director of the assessee company. Thus, the assessee discharged its burden and it was thereafter for the Assessing Officer to show by bringing material on record that cash creditor was not genuine or that the cash creditors did not have creditwort....

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....I-A of Rs. 1,00,000/-, the total income of the assessee comes to Rs. 2,94,788/-. Further, if the household expenditure of the creditor for the said assessment year is taken into consideration then, there will be no surplus in hand to advance the money to the assessee. On other hand, the assessee was unable to submit that there is any interest has been paid on this loan to the lender in the impugned year or in the subsequent year. It was for the assessee to prove that the loan creditor had advanced the money out of the income of any other source like his capital i.e. saving of earlier years or receipt from any other person from which the loan creditor could have advanced the loan. The observation of the Assessing Officer while making the add....

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....particulars of income, therefore, the penalty order passed under Section 271(1)(c) of the Act in pursuance to the said notice deserves to be set aside. The Ld. AR relied upon the decision of the Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 and also the decision of the Hon'ble Apex Court in case of CIT Vs. SSA's Emerald Meadows (2016) 73 Taxman.com 248 (SC). The Ld. AR accordingly submitted that the order of the CIT(A) be set aside and the penalty levied u/s 271(1)(c) be deleted. 12. On the other hand, the Ld. DR strongly supported the orders of the authorities below. 13. We have heard the rival submissions and perused the material available on record, inter alia, notic....